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Going Overboard at the Labor Board

Cato Recent Op Eds - Mon, 11/24/2014 - 09:40

Richard W. Rahn

Whom do you work for? Such a simple question should not require a government agency to give an answer. However, the Obama administration, in its never-ending quest for power over individuals and businesses, has decided that it — rather than you or your employer — should determine whom you work for.

On Thursday, the Senate held a hearing for President Obama’s nominee for the National Labor Relations Board, Lauren McFerran, after the administration abruptly withdrew the nomination of the tainted Sharon Block for the same post. The nomination is slated to go to the full Senate Committee on Health, Education, Labor and Pensions next week and be put to a vote by the Senate during this lame-duck session.

The reason this nomination is important is that the administration is trying to overturn decades of settled law about who is responsible for the wages, benefits and other working conditions for the employees of franchises. Millions of Americans work for companies that franchise their brand names, operating systems and expertise to hundreds of thousands of small-business people. When you go to your neighborhood McDonald’s or a Hilton hotel, chances are it is not owned and operated by the McDonald’s or Hilton corporations, but by independent entrepreneurs. More than 700,000 franchises are operating in the United States, and McDonald’s alone has more than 3,000 franchisees.

“The administration is trying to overturn decades of settled law about who is responsible for the wages, benefits and other working conditions for the employees of franchises.”

Most restaurant, hotel, auto repair and other basic business chains use the franchise business model for the simple fact that it works best for customers, the company that licenses its name and operating system, the small-business person who owns and operates the stores, and the employees. Opening a small business is risky, and most fail within three years. A small-business entrepreneur can greatly reduce the risk by acquiring a licensed franchise from a major company that has the know-how, experience and brand name that most small-business people lack. Advantages to the franchisers are that they can reduce their capital outlays as they expand their businesses and have the operations run by people who know the local market, are connected to the community, and have enormous financial incentive to make the business succeed.

The National Labor Relations Board has the responsibility to be an unbiased referee in disputes between labor unions and management and to make sure that U.S. labor regulations are followed. As union membership has fallen from more than a third of the labor force in the 1950s to a 97-year low of 6.7 percent of the private labor force this year, the NLRB is not as relevant as it was in decades past. However, like most government bureaucracies, the people at the board are looking for ways to expand their mission — and their budget and power. The Obama administration, rather than seeking out people who would be impartial to serve on the board, has selected people with strong ties to unions.

The latest scheme from the general counsel of the National Labor Relations Board is to claim that workers in the local McDonald’s restaurant — for instance, in Jacksonville, Florida — are not employed by the owner of the restaurant who hired and pays them, but in effect are joint employees of the store owner and the faraway McDonald’s Corp. As Sen. Lamar Alexander, Tennessee Republican, stated: “Imagine being the owner of a franchise business and being told that all of the employees that you recruit, hire, train, pay, promote and work alongside day after day are actually another company’s employees too. The NLRB general counsel’s absurd determination ignores decades of precedent and plain old common sense in what can only be an effort to help labor unions add more members.” The other group that hopes to benefit from the “absurd” ruling is trial lawyers, who would prefer to sue a big corporation with deep pockets for an alleged labor law violation rather than a small-business person who might have committed it.

This attempted overreach by the National Labor Relations Board is an indication that it has too much money and time. If I were a Republican senator, I would attempt to delay Ms. McFerran’s nomination until the next Congress convenes so there is adequate time to fully investigate and determine her views. Her comments before the Senate labor committee were not reassuring. The next Senate should also cut the budget of the NLRB to bring a halt to its nonlegislated mission creep.

Mr. Obama claims to care about small business, but if this proposed ruling is adopted, there will be far fewer franchise operations as the franchisers seek to limit their liability — resulting in higher prices and fewer jobs. Finally, it is most ironic that the Obama administration is demanding that the chain of liability for potential labor violations be extended to separate businesses, while the president claims he can do little or nothing about the Internal Revenue Service and other agency employee misconduct, even though he has the ultimate legal responsibility. Imagine the Obama administration being hypocritical.

Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth.

Liberty wins in Massachusetts ‘nanny state’ tobacco battle

Fox News (Politics) - Mon, 11/24/2014 - 09:21
Smokers and nonsmokers alike in Westminster, Mass., came together to push back a move by the town’s Board of Health to ban the sale of all tobacco and nicotine products within the city limits.

Governor-elect’s proposal for sick days upsets some businesses

Fox News (Politics) - Mon, 11/24/2014 - 09:13
Pennsylvania governor-elect Tom Wolf won’t take office for another two months, but one part of his Fresh Start policy plan already has business types feeling queasy.

Obama to award Presidential Medal of Freedom

Fox News (Politics) - Mon, 11/24/2014 - 08:39
President Barack Obama is presenting the nation's highest civilian honor to 19 artists, activists, public servants and others.

Was Al Mohler Right About Sexual Orientation and Secular Counseling?

TownHall Latest columns - Mon, 11/24/2014 - 08:35
Dr. Albert Mohler, president of the Southern Baptist Theological Seminary, is one of the preeminent Christian leaders of our day. He is as clear-headed as he is courageous, always a source of truth and sanity in the midst of a deeply confused culture. 2014-11-23T00:01:00-05:00 2014-11-24T13:35:04Z Michael Brown

Iran nuclear talks to be extended until July

Fox News (Politics) - Mon, 11/24/2014 - 08:07
Facing still significant differences between the U.S. and Iran, negotiators gave up on last-minute efforts to get a nuclear deal by the Monday deadline and extended their talks for another seven months.

How the White House spun Obama’s immigration reversal

Fox News (Politics) - Mon, 11/24/2014 - 05:00
It was an uphill battle for the Obama White House.

US tells Iran to consider extending nuclear talks

Fox News (Politics) - Mon, 11/24/2014 - 04:17
U.S. Secretary of State John Kerry reportedly has proposed extending talks about the future of Iran's nuclear program past a Monday evening deadline to reach a comprehensive agreement on the issue.

Admiral denies role in counterfeiting casino chips

Fox News (Politics) - Mon, 11/24/2014 - 03:00
An admiral linked by Navy investigators to counterfeit casino chips denied Sunday that he played any role in making them.

Obama: Americans want 'new car smell' in 2016

Fox News (Politics) - Mon, 11/24/2014 - 03:00
President Barack Obama says voters want a "new car smell" in the 2016 White House race and that Hillary Rodham Clinton would be "a great president."

AG pick Lynch may face grilling over seizing properties, experts say

Fox News (Politics) - Mon, 11/24/2014 - 00:00
Civil forfeiture — the seizure of cash or property believed to be connected to crime — is on the rise nationwide and may take center stage soon in Washington, where President Obama’s pick to become the next attorney general will need to defend her liberal use of the controversial policy during confirmation hearings, sources told FoxNews.com.

Everything You Ever Wanted to Know about Obama’s Failed Approach to Corporate Inversions

TownHall Latest columns - Sun, 11/23/2014 - 23:35
It galls me to hear demagogic politicians like Obama make absurd statements about unpatriotic corporations that re-domicile overseas when the problem is entirely the result of bad policy that penalizes U.S.-domiciled firms trying to compete in global markets. 2014-11-23T00:01:00-05:00 2014-11-24T04:35:04Z Daniel J. Mitchell

GOP Cowards

TownHall Latest columns - Sun, 11/23/2014 - 23:35
Conservatives who are looking for a champion will not be able to find one in McConnell or Boehner or the establishment candidates running for President, such as New Jersey Governor Chris Christie, former Florida Governor Geb Bush, or heaven forbid, Mitt Romney. 2014-11-23T00:01:00-05:00 2014-11-24T04:35:04Z Jeff Crouere

The American Spirit – An Attitude of Gratitude

TownHall Latest columns - Sun, 11/23/2014 - 23:35
From our nations inception, one of the defining characteristics of the American spirit has been an attitude of gratitude. Leaders throughout our country's history have encouraged and inculcated it. 2014-11-23T00:01:00-05:00 2014-11-24T04:35:04Z Randall DeSoto

UKIP Picks Up Second Seat Following Tory Defection, Two More Coming Up?

TownHall Latest columns - Sun, 11/23/2014 - 23:35
2014-11-23T00:01:00-05:00 2014-11-24T04:35:04Z Mike Shedlock

The Cure for What’s Ailing Americans: Thanksgiving

TownHall Latest columns - Sun, 11/23/2014 - 23:35
The on-line retailer Amazon recently revealed the most popular verse in the Bible for Americans. No, its not the ubiquitous John 3:16 displayed on posters at sporting events everywhere. 2014-11-23T00:01:00-05:00 2014-11-24T04:35:04Z Robert Jeffress

Obama's Immigration Order Dispels Fear

TownHall Latest columns - Sun, 11/23/2014 - 23:35
If you're a foreigner in this country without authorization, you may be a hardworking, upright and taxpaying person, but you live in daily terror of making a fatal misstep. Overlooking a broken taillight, being a witness to a crime, getting hit by a car while crossing the street -- minor misfortunes that attract the attention of police can bring exile, family breakup and misery. 2014-11-23T00:01:00-05:00 2014-11-24T04:35:04Z Steve Chapman

Liberal Chick Sings: "Illegals Are Goin’ Off The Rails On A Death Train"

TownHall Latest columns - Sun, 11/23/2014 - 23:35
Yep, Liberal Chick is back and this time she's singing, yes singing, a song about evil conservatives and Fox News forcing illegal aliens to "ride death trains to the US." 2014-11-23T00:01:00-05:00 2014-11-24T04:35:04Z Doug Giles

Taking the Crony Out of Capitalism

TownHall Latest columns - Sun, 11/23/2014 - 23:35
What too few in Washington appreciate and what the new Republican Congress must if we hope to succeed is that the American peoples current distrust of their public institutions is totally justified. 2014-11-23T00:01:00-05:00 2014-11-24T04:35:04Z Paul Jacob

‘Gay’ DNC Bundler, Founder of HRC Charged with Raping Boy

TownHall Latest columns - Sun, 11/23/2014 - 23:35
Here we go again. Yet another high-profile gay activist has been arrested for homosexual assault on a child. 2014-11-23T00:01:00-05:00 2014-11-24T04:35:04Z Matt Barber

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